Proposal macroeconomic and microeconomic Assignment Sample
The macroeconomic and microeconomic factors that play an important role behind the entrance of MNE’s: a case study of india
1. Introduction
In the last few years, the Indian subcontinent has witnessed rapid growth in its GDP along with a rise and its employment opportunities. It is important to note that multinational enterprises have the potential to develop the host country by leading an increase in its investment and income followed by employment opportunities in its economy. Considering the case of India, the country has seen rapid growth in multinational enterprises over the last decade. This has been further fueled by an increase in entrepreneurs and new businesses in the country. Each of these factors leads to an increase in revenue generation within the economy. Such corporations have also been successful in exploring export markets and increasing export rates for the country. This has also led to a decrease in trade deficits besides maintaining good relations with other countries across the world.
It is important to note that several microeconomic and macroeconomic factors have a strong influence on the success of these multinational enterprises in the Indian subcontinent. The major macroeconomic factors that have played a role include the fiscal policy implemented by the government along with industrial production, rate of unemployment, and interest rates. Inflation has been fairly steady for the country over the past few years, except when demonetization occurred followed by the COVID-19 pandemic in recent times. The microeconomic factors that have played a vital role in the growth of multinational enterprises include the changing tips of the customers along with the level of competition that is found in the market.
The media and the public have also played a significant role in influencing the choices and tastes of customers when it comes to buying new products. Moreover, the huge availability of cheap labor has played a vital role in the Rapid growth of these corporations in the subcontinent. Lastly, there has also been a significant increase in the number of investors who are willing to invest in these new ventures, and that pushes the country towards growth. The following topic is important because this sudden surge in MNEs has outlined a positive growth for the economy of India.
In the following proposal, an outline has been conducted that will highlight the major microeconomics and macroeconomics factors that have played a significant role in pushing the growth of these multinational enterprises in the context of India. It has also taken into consideration the current COVID-19 pandemic and the part it has brought in the economy and especially in the new sectors. The country has been growing rapidly with its Gross Domestic Product (GDP) being the sixth-largest in the world. However, it is important to understand that this has been possible because of the sudden surge of entrepreneurs who are willing to invest in new ventures and make positive views of the digitalization revolution.
2. Literature review
2.1 Role of macroeconomic factors
The gross domestic product plays a significant role in outlining the macroeconomic condition of a country. In the given context it is one of the most important factors that need to be considered when outlining the growth of industry and business. The major contribution made by multinational enterprises is pushing the country towards growth and increasing its GDP. Post the “1991 liberalization policies”, the country has witnessed an upward trend when it came to its GDP.
However, concerning the impact of multinational Enterprises on the GDP of India, owing to the restrictions in foreign direct investment, the contribution of this sector has been around 0.3%. As a result, some major policy changes were instituted by the government to ensure that foreign direct investment could be liberalized in the country. Today, it is considered to be the ninth-largest recipient of FDI as per UNCTAD’s World Investment Report, witnessing around 51 billion dollars in closed during the year of 2019 alone (CII, 2020). This was possible because of the increase in exports conducted by multinational enterprises.
The increase in FDI inflows has led to an increase in the month for skilled laborers in the service sector and the manufacturing sector. This, in turn, has led to an increase in unemployment in the country. It is important to note that the FDI inflows demand greater output to be produced in the production sector and service sector in India in a limited amount of time (CII, 2020). Hence, it can be stated that multinational enterprises have led to an increase in employment opportunities and employment generation thereby causing economic growth in the country.
Fiscal policies are another aspect that plays a significant role in outlining the entry and sustenance in the Indian industry. The taxation policy in India plays a significant role in generating revenue for the government which is further invested in the infrastructure development of the country. The G7 has allowed the country to impose domestic taxation on multinationals in the country, with India working towards raising the current level of taxes from 6% to around 15% (Dave, 2022).
2.2 Role of microeconomic factors
Considering the case of microeconomic factors, the availability of employees has a significant role to play in influencing the success of multinational enterprises in India. The country has a significantly larger population which means that there is a lot of availability of cheap labor that is useful for the manufacturing and service sector to prosper. Moreover, in the past few years, there has been an increase in skill training by most workers in the Indian subcontinent resulting in an increasing demand for skilled laborers to work in multinational enterprises. Hence, a greater number of workers mean a larger production of output thereby generating more revenue for the economy. Moreover, close to 59% of the employees working in multinational Enterprises feel that the employers there are better as compared to other organizations (IANS, 2018). As a result, this further raises the demand for such Enterprises.
The campaign made in India has gained a lot of attention which has also attracted the attention of multinational Enterprises. Through this campaign, there has been an increase in local suppliers which in turn has boosted domestic manufacturing in the country. Multinational Enterprises have started shifting from other markets to the local markets in India for the supply of raw materials and other necessities (Yadav, 2020). This has helped in raising the productivity level within the economy and has also been a primary factor for an increase in the national income. The supply chain has also become more effective going to quick delivery from the local markets and generating more employment.
Investors play a significant role in the success of any multinational Enterprise, and India is considered to be one of the most stable markets when it comes to investing in new ventures. The three major reasons that have been outlined for investors feeling safe in the Indian market are the market potential present in the country owing to its large population and diverse choices of the people (Dutta, 2020). The other two factors include a skilled workforce and political stability within the country. Each of these factors plays a vital role in attracting heavy investment from investors and thereby leading to the growth of MNEs.
2.3 Impact of COVID-19 Pandemic
The pandemic has had a severe impact on foreign and domestic investors which further caused the MNEs to suffer badly. Close to 93% of investors face adverse situations that cause them to withdraw their investments, Making the FDI drop to more than 40% in 2020 alone (World Bank, 2021). It is important to note that the FDI plays a significant role in enhancing the multinational enterprises in India and enabling the growth of the country, as a result, the cost caused the economy to suffer badly (Jain and Dhyanib, 2020). The implementation of lockdown caused all major corporations to close down the business and operate on the E-Commerce platform. This caused a lot of losses for the economy and also raised its levels of unemployment. Therefore, it can be stated that the pandemic almost tripled then that sector of the Indian economy.
Most companies in India namely Unilever, Apple, Whirlpool amongst others highlighted a fall in their sales due to the lockdown restrictions. There was also a rapid slowdown observed in consumer spending around mid-April and throughout me in 2020. This caused the supply chains to be severely affected with many small businesses closing up (Mukherjee and Malviya, 2021). Close to 70% of Indian businesses recorded reduction and their orders belonged to the multinational companies and public and private sectors. Hence, it can be stated that the pandemic caused a significant negative effect on the multinational enterprises in India, and also led to a stoppage of new entrants in the market (Basuroy, 2021).
2.4 Research Gaps
In the following study, some areas are properly analyzed to gain clarity on how multinational Enterprises have impacted the Indian economy. There lies a death of literature when it comes to analyzing the effect the covid-19 pandemic had on causing a stop in the new entrance of MNEs in the market. Moreover, there is not sufficient literature present that outlines the major challenges that are faced by multinational Enterprises when entering the Indian market (Ahsan, 2021). These two research gaps need to be adequately addressed to provide clarity on the subject and analyze the importance of multinational enterprises in Indian markets.
3. Research questions
The research questions in the following study will help in outlining the major areas that will be analyzed to get clarity on the role of multinational enterprises in the context of India. In the following section, a set of research questions has been highlighted that will be analyzed in the given study.
RQ1: What are the major macroeconomic factors that impact the entry insistence of multinational enterprises in the Indian subcontinent?
RQ2: What are the major microeconomic factors that impact the entry insistence of multinational enterprises in the Indian subcontinent?
RQ3: How has the covid-19 pandemic impacted business conducted by multinational enterprises in the Indian subcontinent and the effect it has had on new entries of MNEs in the market?
RQ4: What are the major challenges that multinational Enterprises have to face when it comes to investments through FDI, as well as the policy challenges present in the Indian subcontinent?
4. Research design (methodology and methods)
It is important to note that the methodology and methods play a significant role in outlining the process that will be undertaken in assessing and analyzing the research questions and establishing conclusive results. In the given people, positivism research philosophy will be undertaken to help provide an objective analysis of the research questions posed in the study. Through the use of this philosophy, factual knowledge will be gained regarding the study through observation and measurements that will provide clarity on the subject. Moreover, as opined by Marsonet (2019), through the process it is ensured that no interpersonal feelings or emotions interfere with the analysis of the data. It will also be able to easily identify the patterns and trends over years making it easier to analyze the dataset, and outline how the MNEs became relevant in Indian market.
A deductive research approach will be undertaken in the given study, as it will help in explaining the causal relationship that is present between the chosen variables in the study. In this case, it will help in outlining the relationship between ech independent variable to outline the effect on Indian market. Moreover, through the use of this methodology, it will be easier to measure the concepts and also generally the research findings to a certain extent (Grinchenko and Shchapova, 2020). The approach also takes into consideration the various theories that are present and then analyzes the data collected based upon those theories.
Moreover, a descriptive Research Design will be undertaken in the given study to better explain the characteristics of the chosen variables in the study. Through this design, it will be easier for the analysis of the research questions and find answers to the “what,” “when,” “where” and “how” aspects of the chosen variables, and determine the role of MNEs in Indian market (Atmowardoyo, 2018). Through this method, a flexible approach will be undertaken to collecting the data that will be further analyzed to outline conclusive results. Furthermore, the use of this design will ensure that the qualitative data is effectively analyzed and assessed to establish the findings in the given study.
5. Data collection and analysis
The collection of data plays a significant role in outlining what kind of analysis will be carried out and how the data sets will be used to obtain answers to the research questions of the study. There are two types of data collection techniques namely qualitative and quantitative data collection (Arifin, 2018). In the given study, a qualitative data collection approach has been undertaken to obtain answers regarding how the macroeconomics and microeconomics factors play a significant role in outlining the entry of multinational enterprises in the Indian industry.
An ethnographic will be carried out for the given research, where the data will be collected from authentic data sources including Government websites and company websites to establish authentic findings (Arifin, 2018). The data that will be included will be specific interviews and Documentary data that have been comprehensively detailed by previous researchers conducting the same kind of study. The data will also be collected based upon observations taking into consideration both the pre-covid situation and the post-covid situation and how the multinational Enterprises had behaved in the market during these two periods.
The research will take into consideration the consumer sector industry where the maximum growth of multinational Enterprises has been witnessed in the Indian subcontinent. It will undertake a secondary data thematic analysis through which it will be easier to identify the various factors influencing the growth of MNEs. It will also help in outlining the reason why there has been a surge in the entry of new MNEs and the impact it has made on the Indian economy. The use of thematic study will help in dividing the research areas into two separate themes and analyzing them based on the given data sets (Donaghy et al. 2019). Hence, by following these data collection procedures it will be easier to establish the research questions and develop conclusive answers.
Justification: The use of these methodologies is justified because taking into consideration the current pandemic situation it is not possible to carry out a quantitative data analysis involving a primary survey (Yadav, 2020). Moreover, using secondary data analysis in the form of an ethnographic study will help in assessing the data based on observations, and through the collection of data from previous research conducted in this field.
6. Conclusion/limitations
Hence, it can be concluded that there has been a rapid growth of multinational enterprises in the Indian subcontinent over the past decade. The major reasons that have been outlined include the stable political scenario, followed by skilled labor and favorable market conditions. This can be regarded as the main reason why there has been an increase in foreign direct investment in the Indian economy. However, it is important to note that the sudden start of the covid-19 pandemic has caused a significant disruption in the supply chain of these multinational Enterprises and has reduced consumer demand.
The pandemic had a significant effect on the macroeconomics and microeconomics factors in the Indian subcontinent thereby causing a decrease in the revenue generation of the country. This also led to an increase in unemployment and a fall in the gross domestic product. There has also been an increase in certain policy regulations that have restricted the growth of MNEs and has raised challenges for the entry of new MNEs into the market.
6.1 Identification of contingency plans
It is important to have contingency plans at hand, provided if something goes wrong or it becomes difficult to collect relevant datasets for the project. In case of issues happening when it comes to the collection of data, an alternative approach will be conducted where instead of selecting specific aspects and areas in the industry, the E-commerce market will be taken into account to conduct the required analysis. It is easier to obtain data when related to the E-commerce market as all kinds of information are easily available on the web. Based on the information and data collected from online journals and Publications, the analysis on the role of multinational enterprises and the factors affecting them will be analyzed for the given study.
6.2 Resource requirements
In the given project data will need to be collected from various sources so that it can be effectively analyzed to outline the required results and prove the research questions. In the given study the data sets will be collected from authentic journals that can be available both online and offline. The data set will also be collected from government websites and the annual budget of India. Secondary sources such as newspapers and other print media will also be considered along with books written on the subject (Kamal, 2019). Based on these resources the required data sets will be collected and further analyzed.
7. Timeline/Gantt chart
| Activities | Weeks | ||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | |
| Topic Selection | |||||||
| Outlining the research questions in the study | |||||||
| Setting down the aims and objectives of the study | |||||||
| Selecting relevant industries and finalizing research area | |||||||
| Conduct review of literature | |||||||
| Outline Research gaps | |||||||
| Outline the methodology and research strategy | |||||||
| Conduct Ethnographic study | |||||||
| Conduct secondary data analysis and select relevant themes | |||||||
| Complete project | |||||||
Table 1: Gantt Chart
The following timeline will be followed when it comes to analyzing the given study. In the initial week, the topic will be further assistance selected which will be followed by sitting down the aims and objectives of the study and the research questions in the next week. Once the research question has been identified it will be followed by outlining the research area or industry where the analysis will be carried out. This will be followed by the review of the literature and outlining the research gaps that are present. This will be followed by outlining the research strategy and methodology that will be used to analyze the data sets collected in the following week. Once the ethnographic study has been conducted the analysis will be carried out based on themes and the project will be completed in the final week.
References
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Arifin, S.R.M., 2018. Ethical considerations in qualitative study. International Journal of Care Scholars, 1(2), pp.30-33. Available at: https://journals.iium.edu.my/ijcs/index.php/ijcs/article/download/82/27
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